jimbob

Unfortunately the tax cuts went mostly to the rich, and with capital as mobile as it is these days the investments they make will be where markets are growing, wherever that may be in the world - it won't necessarily make the US rich, just those who got the tax rebates. Ironically China, India and others have barriers to foreign investment, which the article doesn't mention. If the tax cuts were for the sections of society most likely to spend on home-produced goods and services then the positive effect would be slower but more likely: people have more money so can spend more now (and lower tax, so can be paid less in the future while still taking home the same salary). This increased spending power encourages investment, financed initially through borrowing, and the money trickles up through the economy to the entrepreneurs, financiers and brand-owners identified by Bush as the most deserving of the tax cuts, who eventually collect the lot.

I'd not heard about the law the article deals with so was eager to read on but the sentence above suggested early on that it was going to be biased and unfounded. I know that many countries ignore WTO rules, but to say the US does not is just ridiculous. Its cattle get $150 per year (2001, EU=$435!), the steel industry is still subsidised even after Bush had to back down on his policy of increased import tarriffs and overseas food producers pay higher import tax on processed food than raw material - so US food processors keep their huge markups. Furthermore, the US uses bilateral trade agreements to influence the foreign policies of its trade partners. So when New Zealand and Australia were both negotiating in 2002 Australia got a deal whereas New Zealand stood firm, listened to its people, and opposed the war in Iraq.

What China seems to be doing is not so different from what the US has done for the past half-century - used its power to influence global markets in its favour. As well as being the main player in the WTO and World Bank, the US has benefitted from being the major currency because other countries have to get dollars if they want to buy things like steel, copper and oil. Interestingly Saddam Hussein began (or was to begin) trading oil in Euros.

I've seen a few documentaries on the end of the Cold War lately. The conclusion of some Americans is that they won it not because the USSR was bankrupt but because of 'a little thing called Democracy'. Either they're naive or brainwashed or the free world has nothing to fear from China.